PAYG withholding variation application

Complete the PAYG withholding variation application to vary or reduce the amount of pay as you go (PAYG) tax withheld from income paid to you in the application year.

This application is non year specific and valid for one financial year. If you apply in May or June, the variation will apply to the financial year starting from 1 July.

You can lodge your application during the year. The last date for lodgment is 30 April of the application year.

The main purpose of varying or reducing the amount of withholding is to make sure that the amount withheld during the income year best meets your end-of-year tax liability. For example, you may want to apply for a variation if the normal rate of withholding leads to a large credit at the end of the income year because your tax-deductible expenses are higher than normal.

Important information

have lodged all required tax returns and activity statements, or notified us in writing if you were not required to lodge tax returns in prior years

did not receive a debit assessment on your last tax assessment (if you also had an approved withholding variation for that year)

do not have any outstanding tax debt owing to the Australian Government

do not have any outstanding debts under any other Acts administered by us.

We may seek more information from you before or after your application is processed. If you fail to provide this, your application may not be approved.

We process your application based on the information you provide. It is your responsibility to make sure this information is adequate to allow us to calculate a withholding rate to meet your end-of-year tax liability.

If you are granted a variation, this does not mean we have accepted the tax treatment of the income and deductions on your application. Your actual tax liability will be determined after you lodge your tax return.

For more information, you can phone us on 1300 360 221. If you are a tax agent, phone 13 72 86, fast key code 1 2 3 between 8.00am and 6.00pm Monday to Friday.

Aggressive tax planning

In the past, promoters of managed investment schemes, and tax-effective investment products or arrangements, have encouraged their clients to apply for income tax withholding variations to produce immediate tax savings. Promoters often imply that the granting of a variation supports the tax deductibility of the investment and indicates our acceptance that the arrangement complies with the relevant income tax laws.

If you want more certainty about the tax treatment of an arrangement, ask the promoter if they have a product ruling from us. If the answer is:

yes – ask for a copy and read it, or have an independent tax professional read it and explain how it applies to you

no – ask why they don't have a product ruling for the project and apply to us for a private binding ruling or consult a tax professional who is not involved in promoting the investment.

If you have concerns about a promoter or a tax scheme, you can phone our hotline anonymously on 1800177 006.

Non-commercial losses

If you have a net loss from a business activity you carry on as an individual, either as a sole trader or in partnership, the non-commercial loss rules will apply.

These rules determine if you can use your business loss to offset income from other sources. You can only offset your loss against assessable income from other sources if one or more of the following applies:

one of the exceptions for primary production or professional arts businesses apply

you meet the income requirement, and one of the four tests is satisfied – profits test, assessable income test, other assets test, real property test

we have exercised our discretion to allow you to claim the loss.

If you do not satisfy the above criteria, you must defer the loss to a future year when both of the following apply:

Starting and finishing dates

If your application is approved, the varied or reduced amount of withholding will start from the next available payday after your pay office receives the notice of withholding variation from us.

Your variation finishes on the date shown on the letter you receive from us. To continue to have varied or reduced tax withheld from payments after this date, you must lodge another variation application – at least six weeks before the expiry date.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.